1. JP Morgan looks at Bombardier
Aerospace analyst Joe Nadol has an interesting take on Bombardier and the next 12 months. Nadol begins with, “We believe Bombardier may be better positioned now than at any time in the 10+ years we’ve followed the stock,” and continues:
Three Important BBD Drivers: 1) CSeries, 2) CSeries, 3) CSeries. With the business jet and train businesses both poised for solid earnings growth, the CSeries is now clearly set as the key likely driver of the stock. There are two primary issues here. The first is demand, and we believe the program needs to start racking up more orders this year, even by the Paris Air Show in June. We believe there is a high level of interest, and we are fairly confident Bombardier will sell more aircraft. The partnership with Comac that Bombardier announced last week seems to foreshadow meaningful Chinese orders. Bombardier also has nearly $12 bil in financing for CSeries aircraft available from Chinese sources. The second issue is execution. Management noted that Bombardier still expects to fly the aircraft next year and also highlighted some recently achieved milestones for the engine. However, Flight reported in recent weeks that the date for first flight may have slipped by a few months into next fall, so the program does appear to be experiencing at least the normal level of fits and starts. Thus far, the CSeries appears on track overall, but execution obviously remains a major overhang given the complexity of the program and the well-known problems the industry has had meeting cost and schedule targets in recent years.
2. Pratt & Whitney gains momentum
Last week’s announcement of Indigo Airlines selecting the PW P1000G Geared Turbo Fan for its 150 Airbus A320neo order follows on the heels of the ILFC order for the GTF for 60 A320neos.
Next up is Lufthansa, whose order could come as early as today. We believe PW is likely to get this one, too. If our hints are correct, the line-up then is:
Pratt & Whitney
While Indigo’s A320 fleet is powered by International Aero Engines, perhaps giving PW an advantage in winning this order, CFM competed for the deal hard. The ILFC deal was a major, if partial, victory; PW won orders for 60 of the 100 A320s/321s ordered and ILFC continues discussions for the remaining 40. We would expect a lessor to split the engine order in the end.
Lufthansa will be a significant win, whether it be for PW (as our information suggests) or for CFM. Lufthansa uses CFM engines for its A320 fleet and IAE for the A321s. Lufthansa also ordered the Bombardier CSeries, equipped with the GTF.
From our information, the contest appears to be coming down to which company is offering the most aggressive maintenance support package. The GTF has a fuel burn advantage of 2%-4%, according to people who have seen the numbers of both companies. Price, maintenance and after-market support therefore will be the determining factors.
Update: It’s official: Lufthansa selected PW GTF. Here is the link to the press release.
3. Name that Tanker
In a previous post, we offered readers the chance to name the KC-46A tanker. Below are the names submitted. Vote for your choice.
4. Southwest’s 737 decompression
The NTSB yesterday said the 737-300 involved in Friday’s decompression at 35,000 had pre-existing fatigue cracks. KMBC.com reports that the area in which the skin split had been repaired about a year ago.
The LA Times has this story with new information as of Sunday night.
5. Air France 447 found
Airbus announced yesterday the wreckage of Air France Flight 447 has been found. We hope the flight data and voice recorders can be found. Although it’s been more than 18 months since these have been underwater, previous accidents with long submersions have derived useful data from the records.
On the assumption that investigations will now be able to definitively identify the cause of the accident–they already have a pretty good idea and there was a television special that did a good job of reporting on this–perhaps the irresponsible bloggers and commenters who have engaged in their cheap shots will understand the facts.
The Wall Street Journal posted this update.